Economic and Socio-Political Factors Influencing Real Estate Demand

Several economic and socio-political factors significantly influence real estate demand:

Economic Factors:

• Economic Stability and Growth: A stable and growing economy boosts buyer confidence and purchasing power, driving demand for both residential and commercial properties. For example, a projected GDP growth of around 3% supports a robust property market by increasing disposable incomes and investment appeal.

• Interest Rates and Financing: Falling mortgage rates improve affordability, encouraging more buyers and investors to enter the market. Attractive financing terms can create a favourable buying climate, increasing demand.

• Household Formation and Income Growth: The formation of new households, often linked to marriage rates, sustains demand for housing. Rising household incomes, especially those exceeding certain thresholds, enable more buyers to afford private properties, including upgrades from public housing.

• Supply Constraints and Construction Costs: Limited land supply and high construction costs restrict new housing availability, maintaining competitive demand and supporting price stability.

Socio-Political Factors:

• Public Housing Policies: Eligibility rules for purchasing public flats, such as restrictions on owning other properties, shape demand patterns by segmenting the market and influencing buyer behaviour.

• Government Urban Planning and Infrastructure: Strategic infrastructure projects and urban transformation initiatives enhance connectivity and property values in targeted areas, attracting buyers and investors to those regions.

• Socio-Economic Mobility and Homeownership Culture: Public housing policies encourage asset investment and socio-economic mobility by enabling homeowners to sell flats on the resale market and upgrade, embedding homeownership as a key socio-economic goal.

• Market Sentiment and Regulatory Environment: Government cooling measures and policies aimed at sustainable price growth influence buyer confidence and timing decisions. While some buyers may hesitate due to affordability concerns or policy uncertainty, overall market sentiment remains cautiously optimistic due to stable fundamentals.

Together, these factors create a dynamic interplay where economic growth, financing conditions, demographic trends, government policies, and infrastructure development collectively shape real estate demand.